Bank of Japan Meeting: Negative Interest Rate Unwind Priced In, Focus Shifts to FOMC

The market seems to have priced in the potential unwinding of negative interest rates ahead of tomorrow's Bank of Japan (BoJ) monetary policy decision announcement. Over the past two weeks, remarks from BoJ officials and leaked reports have gradually permeated the market, leading to this anticipation. Tomorrow's meeting is expected to discuss topics such as the termination of Yield Curve Control (YCC) and halting ETF purchases. It appears that the market sentiment on these points has also been formed. The extent of any market shock may depend on Governor Kuroda's press conference tomorrow, where an emphasis on continuing the accommodative policy could help mitigate adverse reactions. The Tokyo stock market is already witnessing increased buying of index futures.

The potential for turmoil in the market seems to be shifting towards the upcoming Federal Open Market Committee (FOMC) meeting. Here, there appears to be a tendency for the timing of interest rate cuts to be delayed due to persistent inflationary pressures. Market dynamics could be affected by evaluations of Chairman Powell's stance on inflation and any changes in members' interest rate forecasts.

Upcoming economic indicators to be released in the international markets include Hong Kong employment statistics (February), Eurozone Consumer Price Index (final) (February), Eurozone trade balance (January), Canadian industrial product prices (February), and the US NAHB Housing Market Index (March). The Eurozone Consumer Price Index being final is expected to cause minimal disturbance unless there are significant revisions.

Regarding speaking events, a speech by the Governor of the Central Bank of Portugal, Centeno, is scheduled. Additionally, towards the end of the NY session, the CEO of the semiconductor giant NVIDIA is set to deliver a speech on AI-related topics. The company has garnered significant attention.

I had been considering buying JPY, but the prevailing view that the Bank of Japan will maintain an accommodative stance even after unwinding negative interest rates seems to have been priced in. Alongside the substantial rise in the Nikkei Average, USD/JPY is also on the rise. Trading the Japanese yen is becoming more challenging, but the perspective of selling the Swiss franc remains ongoing.